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Message to Mexico: Arizona Still Wants to Trade

While NAFTA talks continue, Tucson and Arizona work to strengthen ties with their southern neighbors.

As the next round of talks to reshape North American free trade looms, Arizona and Mexico continue to strengthen economic ties outside of federal government efforts. This will help maintain demand for Tucson and Arizona commercial space.

The efforts are aimed at countering anything that happens to the 23-year-old North American Free Trade Agreement. Both sides see that a robust economy on this southern border region must be preserved.

Arizona and Mexico have had a long history together, from being one country under Spain and Mexico to today’s thriving regional activity that involves manufacturing, tourism and global trade.

NAFTA eliminates nearly all tariffs on goods from Canada, the United States and Mexico, as well as provide a template for settling disputes and governing trade practices. Arizona’s business, economic and political leaders aren’t sitting back waiting to see what happens with the trade agreement.

Six days after talks began on a retooled NAFTA, a delegation of nearly 70 Arizona elected officials, business leaders and regional economy experts went on a trade mission to Mexico City and the state of Guanajuato. They hope to boost trade and strengthen relations that have strained under the U.S. and Arizona political climate.

The group included Republican and Democratic legislators, as well as representatives from the Tucson Hispanic Chamber of Commerce, the Tucson-based University of Arizona and the Tohono O’odham Nation west of Tucson.

That effort is just one of many activities by organizations like the Tucson Hispanic Chamber and the Arizona Commerce Authority. They continue to make regular trade missions into Mexico. The authority has a trade office in Sonora, the Mexican state just south of Arizona. The city of Tucson’s international trade office maintains ties to Mexico, as well as Canada.

Inseparable Economies

Arizona and Sonora have formed an economic super-region where residents and businesses thrive on the jobs and companies that depend on cross-border trade. Thirty percent of all of Arizona’s annual $22 billion in exports to other countries go to Mexico, while 37% of Arizona’s imports from foreign markets come from Mexico.

Some 100,000 Arizonans depend on this super-region for their jobs, including in companies that require bilingual speakers and experts in Mexican business culture. Businesses large and small have locations in both countries. Companies in the United States—Caterpillar is one example—secure Southern Arizona commercial space to be close to clients and operations in Mexico.

These industry segments create a manufacturing hub that, by necessity, has encouraged a strong transportation and logistics infrastructure. The Port of Nogales is the primary entry into Southern Arizona, while the Port of Tucson is a full-service inland port with a rail yard and intermodal facility. Tucson is beneficially located along major ground and air routes that provide easy access to other parts of the United States.

Companies recognize that Tucson and Southern Arizona commercial space provide them not only good locations for doing business in Mexico, but a synergy that supports international trade.

The Tucson Hispanic Chamber has several programs that help businesses wanting to be in the import-export business. Its membership and its Arizona-Sonora Business Resource Guide include businesses on both sides of the border.

Sun Corridor Inc., originally an economic development driver for the Tucson area, has expanded its services through four Arizona counties and dozens of Sonora municipalities.

NAFTA Concerns

We agree with many of the players in cross-border trade that tweaking NAFTA to bring it up to date is a good idea. But massive changes or its abandonment will unravel a crucial part of the Arizona economy.

Some concerns that Arizona experts are watching include

changes in the rules of origin governing how much of a product was generated in the United States or North America

“American First” efforts to reduce the trade deficit with Mexico and create more jobs in the United States, issues that some experts believe can’t be resolved in a trade agreement

demands that become so onerous that Mexico and Canada turn their attentions to international trading partners that are easier to work with

negotiation positions that become so entrenched that NAFTA falls apart and is abandoned.

That all sides are talking about improving NAFTA is a good sign. Fortunately, Tucson and Southern Arizona have the right attitude. We feel this independent trade effort helps companies seeking Tucson and Arizona commercial space feel confident that the area’s trade relationship with Mexico and Canada will remain strong.

In my 25-plus years as a commercial real estate tenant representative, I’ve picked up a wealth of information and expertise. I’m passionate about making sure that corporate users, tenants and buyers like you get a fair deal and the best solution for your business’s bottom line.COMMERCIAL REAL ESTATE GROUP OF TUCSON specializes in representing tenants and corporate users across the United States, Latin America, Europe and Asia.
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